Japan-U.S. Joint FX Intervention Unlikely to Reverse Yen Depreciation
Dow Jones
Aug 04
0445 GMT - The recent intervention by Japanese and U.S. authorities to curb yen weakness is unlikely to reverse the currency's depreciation trend unless accompanied by supportive monetary policy, ANZ Research economists say. Japan's legacy of prolonged deflation will continue to make policymakers cautious about raising interest rates, with the Bank of Japan likely to prioritize avoiding risks to growth over allowing inflation to run modestly above target. Geopolitical developments will be key in determining the timing of the next policy move, with further policy normalization appropriate if uncertainty surrounding the Middle East crisis persists, they say. ANZ expects the BOJ to raise its policy rate in October, though the likelihood of a September hike is increasing.
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